+ 44 20 8144 3706Abstract:
M&M is the one of the largest automobile company in the world. An analysis of firm financial it is identified that it has lost control of expenses in the business and due to this reason earn less profit in the business in 2019 relative to 2018. In balance sheet all elements have the same proportion of assets and liabilities and picture remain same across the years. M&M is earning less profit in its business and due to improper corporate finance strategy have less ROA and ROCE. Liquidity position is also not good and equity is overvalued in the market.
Introduction:
Mahindra and Mahindra (M&M) is the India largest automobile maker and is operating in multiple nations of the world. Currently, the firm is operating in 100 nations of the world and it is in business from 7 decades. The firm manufactures wide variety of cars and tractors. Currently, a company valued at 20.7 billion. M&M have 57 manufacturing facilities across the globe. It also operates R&D centers in 11 nations of the world. It can be said that firm is operating its business on large scale.
In the present research study, literature review is done and under these company Directors overviews are evaluated. Moreover, varied theories are reviewed to evaluate company corporate finance strategy. Further, trend analysis and ratio analysis is done on firm and comments are made on the same. Thereafter, equity valuation is done and it is identified whether it is overvalued or vice-verse. At end, conclusion and recommendation section is prepared in the report.
Literature review:
In the annual report Directors of Mahindra and Mahindra talked about the issues they face and solutions adopted to solve the problem. Elevation in trade tension and tariff between US and China greatly affects other nations and this affects business operations of M&M (Back to work safer stronger., 2020). Continue deceleration in China economic growth and poor performance of emerging market economies heavily hurt firm business operations. India GDP growth also remains less and due to this reason in domestic market demand was weak. Borrowing cost also elevate in the Indian market which make it hard for the firm to arrange finance at appropriate interest rates.
Recommendation:
It is recommended that the business firm needs to work heavily on its corporate finance strategy and under this it needs to work on its capital structure. Currently, firm capital structure is at optimum level, but if in future debt portion in it remain low the cost of finance will be high for the firm. Hence, to control cost of capital more debt must be taken in the business and less elevation must be done in equity. It is also recommended that firm must change its dividend policy and must not pay dividend each year of if pay then dividend of less amount must be paid. With passage of year portion of equity, increased in the business due to which dividend value as cost also increases. By changing dividend policy or paying less dividend firm can save an amount of cash and invest it in R&D or use it to meet working capital needs. Already current ratio value is below standard and there is scarcity of working capital in the business. Considering, elevation in the expenses percentage of sales it is recommended that cost control strategies need to be adopted in the business or need to be improved so that strong control can be maintained on expenses in the business.
Reference:
Books and Journals
Battiston, S. and et.al., 2016. Complexity theory and financial regulation. Science. 351(6275). 818-819.
Daryanto, W. M.. and Nurfadilah, D. 2018. Financial Performance Analysis Before and After the Decline in Oil Production: Case Study in Indonesian Oil and Gas Industry. International Journal of Engineering & Technology. 7(3.21). 10-15.
Desta, T. S. 2016. Financial performance of “The best African banks”: A comparative analysis through CAMEL rating. Journal of accounting and management. 6(1). 1-20.
Gousario, F.. and Dharmastuti, C. F. 2015. Regional financial performance and human development index based on study in 20 counties/cities of level I region. The Winners. 16(2). 152-165.
Jan, A.. and Marimuthu, M. 2015. Altman model and bankruptcy profile of Islamic banking industry: A comparative analysis on financial performance. International Journal of Business and Management. 10(7). 110-119.
Knell, M. 2015. Schumpeter, Minsky and the financial instability hypothesis. Journal of Evolutionary Economics. 25(1). 293-310.
Kshetri, A.. and Jha, B. 2016. Online Purchase Intention: A Study of Automobile Sector in India. Review of Integrative Business and Economics Research. 5(3). 35.
Lecy, J. D.. and Searing, E. A. 2015. Anatomy of the nonprofit starvation cycle: An analysis of falling overhead ratios in the nonprofit sector. Nonprofit and Voluntary Sector Quarterly. 44(3). 539-563.
Luthra, S.. and Haleem, A. 2015. Hurdles in implementing sustainable supply chain management: An analysis of Indian automobile sector. Procedia-Social and Behavioral Sciences. 189(1). 175-183.
Nag, B. 2017. Assessing the Future of Trade in the Automobile Sector between India and Pakistan: Implications of Abolishing the Negative List. In India-Pakistan Trade Normalisation (pp. 93-127). Springer, Singapore.
Nagarkar, J. J. 2015. Analysis of financial performance of banks in India. Annual Research Journal of Symbiosis Centre for Management Studies. 3. 26-37.
Here, at archlite assignment help, we provide various academic assignment assistance including History assignment help | Law dissertation help & many more.
